Ryanair boss sees China catching Airbus, Boeing

Published June 21, 2011

| Reuters

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June 21, 2011 – By Conor Humphries

Ryanair CEO Michael O'Leary, who signed a deal with the Commercial Aircraft Corporation of China on Tuesday to help it design a rival to Boeing's 737, said the American manufacturer risked falling behind its Asian rival if it doesn't roll out a new plane soon.

"There is no technological gap, it's all sub assembly," he said. "If you go forward 10 or 20 years the Chinese will be equally as strong as Airbus or Boeing."

Ryanair, which currently flies only Boeing jets, in May said it had met with officials from the Commercial Aircraft Corporation of China and Russian rival United Aircraft.

Analysts said Ryanair's agreement with COMAC may be a bid to put pressure on Boeing to provide better terms for a large fleet upgrade, after talks over a 200-plane order broke down in 2009.

But O'Leary said Boeing risked falling behind not just Airbus, whose revamped A320neo is selling well, but also rivals in the developing world if it does not decide soon whether to upgrade its current 737 or design a new plane.

"I don't think a re-engineering project is going to be sufficient to respond to the Airbus neo, or indeed the COMAC," O'Leary said.

"We would prefer to see redesigned aircraft that would focus on more seats, lighter weight on the aircraft and more fuel-efficient engines," he said.

Ryanair would like to make a major plane order in 2015-2016, although that is not set in stone, O'Leary said. The key is a plane with closer to 200 seats than the 189 on its 737 fleet, which would allow it to make savings on cabin crew costs.

SCEPTICAL

Ryanair has also spoken to Russia's state-owned United Aircraft Corp (UAC), but O'Leary said they were not as much of a threat to the established players as the Chinese.

"The Russians are a lot further behind. They don't have the same resources to devote to it as the Chinese," he said. "I'd be much more skeptical at this stage about the Russians' ability to deliver on the day that they say they will deliver."

Under Tuesday's deal, signed at the Paris airshow, Ryanair will consult with COMAC on the development of its C919 commercial aircraft, with up to 200 seats, which is due to hit the market in 2018.

Brian Devine, an analyst with NCB stockbrokers in Dublin, said an order in 2015-16 might be too soon for a Chinese manufacturer to be a serious threat.

"In the medium term, the agreement with COMAC is more likely a gambit," Devine said, citing the high maintenance costs of introducing a second type of plane to Ryanair's relatively young Boeing fleet.

"But if they are actively involved in the design, it could allay safety concerns and be a significant development for the longer term."